Will 2013 be Amazon’s Year of the Enterprise

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We are just wrapping up the first full week of 2013, and Amazon is already at the center of a stormy cloud debate. Financial analysts are predicting a huge year for AWS as they move into the enterprise space. However, some industry insiders are arguing that Amazon has a long way to go before it can really take on the enterprise market. Let’s take a quick look at both sides.

Amazon Web Services – A $30 Billion Business

In the past few days, many tech publications were abuzz with analyst upgrades and reports for Amazon. According to Ben Schachter, a senior financial analyst at the Macquarie Group, AWS will be bringing in $3.8 billion in revenue this year, up from estimates of $2 billion in 2012 revenue. Schacter claims that if AWS were to be an independent entity, its market value would range from $19-$30 billion.

Schacter’s argument assumes that until now, most of AWS’ business was from smaller companies and startups who could not afford internal data centers to support their needs. Going forward, enterprises moving onto the cloud will provide AWS with a much more lucrative target market, boosting revenue accordingly.

Can AWS Self-Serve Fly with Mr. Suit & Tie

However, many are skeptical if AWS has what it takes to penetrate the enterprise market. Rodney Rogers wrote a provocative and very entertaining op-ed piece in TechCrunch, where he points out six areas where AWS will be greatly challenged in this regard. Among the six issues, he emphasized how AWS’ “no-touch” approach to customer support will never work for enterprises whose IT and business needs are constantly in flux. He pointed to a BigData Group study (based on Cloudyn data) that highlights the rampant underutilization and excess spending that currently exists among AWS users. In the enterprise environment especially, AWS would need to hold customers’ hands to help them continuously fine-tune their cloud deployments.

David Linthicum also alluded to AWS’ deficiency in this area in his recent InfoWorld article. He noted how “larger enterprises are investing in public clouds, and they’re accustomed to real people talking to them on the phone, account managers in their offices, and cell numbers for support engineers on call around the clock. In other words, they want public cloud providers to offer the same level of customer service as the larger enterprise software providers”.

An Opportunity for Cloud Lifecycle Management Vendors

My personal view on this is that AWS will continue to grow like gangbusters in both the SMB and enterprise arena despite their strong self-serve philosophy. The classic value that public cloud provides, apparently trumps the lack of hand holding, and here at Cloudyn we are working with numerous global giants in all industries that are ramping up their AWS consumption.

However, it’s completely true that enterprises require assistance in managing their cloud deployment. So while AWS provides the bare-bones infrastructure, companies (like Cloudyn) that help manage areas such as cloud cost allocation, capacity planning and more, are finding themselves in high-demand.

As always, time will tell.
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